AI spending to reach $632 billion in the next 5 years, research finds

The widespread adoption of artificial intelligence (AI) technologies across industries, from media and education to business and even healthcare, shows no signs of slowing. However, despite the recent surge, many firms and organizations have found implementing AI seamlessly into their business models challenging, resulting in costly failures. Heavy spending on AI applications has also begun to give investors pause -- but even as concerns mount, it isn't stopping. 

According to a new forecast from research firm International Data Corporation (IDC), global spending on AI will more than double in the next five years, reaching a staggering $632 billion by 2028. 

The report offers a comprehensive analysis of the AI spending landscape and the target markets where AI opportunities seem to be most lucrative. Dedicated to examining global spending on AI, IDC examined over 250 functional use cases, including industry-specific use cases across the "IT infrastructure and resources for AI systems from infrastructure service providers." 

Also: Sonos is failing and millions of devices could go with it - why open-source audio is our only hope

According to the report, expenditures will increase rapidly by 29% annually, and AI applications and gen AI tools will become standard practice across 27 industries. The industries expected to spend the most are financial, business, personal, and software and information services. 

There is some consensus that the spending is worthwhile. Ritu Jyoti, group vice president of AI and Data Research at IDC, said in a statement, "AI-powered transformations have delivered tangible business outcomes and value for organizations worldwide, and they are building their AI strategies around employee experience, customer engagement, business process, and industry innovations."

Moreover, Jyoti explained, barriers to AI adoption at scale will decline, making the integration of AI across operations a "tangible reality for numerous organizations."

IDC also found that software will be the largest category of AI technology spending, representing over half of the overall market for most of the five-year forecast. This comes as no surprise given Microsoft's $10 billion, multi-year investment in OpenAI and ongoing partnership with the company.

Also: AI accelerates software development to breakneck speeds, but measuring that is tricky

Despite recent anxieties from investors, Microsoft has continued to double down on AI spending as demand rises. In a recent earnings call, Chief Financial Officer Amy Hood stated that AI-related spending "represented nearly all of our total capital expenditures," with "roughly half" for infrastructure needs that will "support monetization over the next 15 years and beyond."

Furthermore, the report emphasized this recent trend by describing in detail the accelerated rate at which AI platforms (Microsoft Azure AI, Amazon AI services, Google Cloud AI, and OpenAI) grew last year and the projected growth maintaining a "remarkable momentum," driven by the increasing demand and deployment of AI technologies across many industries.